
It’s a huge week on the earnings front, with loads of big name companies reporting. This week we have Tesla (TSLA), Netflix (NFLX), Bank of America (BAC), Johnson & Johnson (JNJ), American Express (AXP) and Goldman Sachs (GS) all set to report.
Before a company reports earnings, implied volatility is usually high because the market is unsure about the outcome of the report. Speculators and hedgers create huge demand for the company’s options which increases the implied volatility, and therefore, the price of options.